Minerva Market View for Nov 29, 2023

Indices continue to trade in a narrow range. This can lead to explosive moves.

Good evening! The major indices continue to trade in a tight trading range. This has usually been followed by upside moves:

Ryan Detrick tweet: “Don’t short a dull market”

---

Positioning and Market View

All the indicators we track continue to bode well for the rally to continue. The S&P 500 posted a gain today, and more importantly, the up days have been on higher volume than the down days since the recent bottom:

The S&P 500 is overbought but can stay that way for a long time.

The Nasdaq shows similar characteristics:

The Nasdaq also has a healthy up/down volume.

SPY 0.00%↑ breadth indicators are healthy:

SPX breadth tweet by @EFFMktHype

And today, Fed speakers seemed to indicate that they would be open to cutting rates even without a slowdown/recession if inflation were to continue moving lower. This can add further wind to the sails of the rally.

---

Portfolio and Performance

Today was a reversal of yesterday, with our alpha book down, and beta saving the day. We have several HVAC stocks such as FIX 0.00%↑ WSO 0.00%↑and LII 0.00%↑ in our portfolio as a play on the IRA (Inflation Reduction Act), and today the entire sector took a hit, dragging down our long/short book. Winners included ARKK 0.00%↑ and the M-REITs AGNC 0.00%↑ and NLY 0.00%↑.

For the week, we’re still up vs. the S&P because of outperformance on Monday. We shorted NVST 0.00%↑ and NEOG 0.00%↑ on weak fundamentals and technicals today, as posted on Twitter:

Daily chart of Neogen

Daily chart of Envista Holdings

We also covered our shorts on CSIQ 0.00%↑ HR 0.00%↑ and MPC 0.00%↑ due to unfavorable price action and got stopped out on our recent long COCO 0.00%↑.

All these changes net out to a net-long position that continues at 81%.

---

Watchlist

For tomorrow, we’re watching:

Long: SKX 0.00%↑ : strong fundamentals and breaking out of a cup base on strong volume, although it has had a straight run up so might need to cool here.

Sketchers stock chart

Shorts: DAR 0.00%↑ LSCC 0.00%↑ RVTY 0.00%↑ all look weak on fundamentals and technicals and don’t have a high short interest (fewer chances of a squeeze):

Revvity stock chart

Darling Ingredients chart

Lattice Semiconductor chart

---

Worth checking out

The big news today was the passing of Charlie Munger, Warren Buffett’s right-hand man at Berkshire Hathaway. Back in the day, I’d enjoyed reading Poor Charlie’s Almanack, a collection of his quotes and wisdom. A new edition is coming out soon, which I am looking forward to reading:

Amazon Associate link to Poor Charlie’s Almanack

---

Among other things, Vitalik Buterin’s essay “My techno-optimism” is worth a read:

---

And I am looking forward to watching this Blockworks interview with Marko Papic:

That’s all for now. Happy Trading!

---

Disclaimer: This post is for professional investors only and is shared with other like-minded investors for the exchange of views and informational purposes only. Please see the disclosures and disclaimers for more details and always note, we may be entirely wrong and/or may change our mind at any time. This is NOT investment advice, please do your own due diligence.

Nothing in this newsletter is an offer to sell or to buy any security. The author is not responsible for any financial loss you may incur by acting on any information provided in this newsletter. Before making any investment decisions, talk to a financial advisor.

---